London Borough of Havering

Delivering Efficiency Savings in the Procurement of Agency, Temporary and Interim Staff - A National Exemplar project

PROJECT DOCUMENTATION

PROJECT CLOSURE REPORT

Version: 0.5

Date: 30 March 2010

Author: Hassan Iqbal

Status: Final **Version 0.5**\
**Date of this version:** 30 March 2010

| Revision date | Previous revision date | Summary of Changes | Changes marked | |---------------|------------------------|--------------------|----------------| | | | | | | | | | | | | | | |

**Distribution**\
This document has been distributed to:

| Name | Title | Date of Issue | Version | |------|-------|---------------|---------| | | | | | | | | | | | | | | | | | | | | Contents

SYNOPSIS OF ORIGINAL BID ......................................................................................... 4

PROGRESS AGAINST INTENDED DELIVERABLES AND OUTCOMES .................. 5

FUNDING AND COSTS .................................................................................................. 5

CHANGES MADE TO PROGRAMME AND WHY ..................................................... 6

MITIGATING ACTIONS TO RISKS, MANAGEMENT OF ISSUES .......................... 6

NOTABLE ACHIEVEMENTS ....................................................................................... 6

LESSONS LEARNED .................................................................................................... 8

EVALUATION TO DATE ............................................................................................... 9

PROJECT CLOSURE RECOMMENDATIONS ............................................................ 9

BENEFITS TRACKING / LEGACY MATTERS ............................................................ 10

DISSEMINATION OF WHAT WAS LEARNED ............................................................ 10 SYNOPSIS OF ORIGINAL BID

1. The agency staff efficiency savings project was proposed by the London Borough of Havering (LBH) in 2004. Its purpose was to demonstrate how the recruitment and management of agency, interim and temporary staff by London local authorities could be undertaken more efficiently and achieve savings.

2. In particular, the project looked at managed services for agency, interim and temporary staff procurement. A managed service typically acts as an interface between the local authority requiring the staff, and the organisations supplying the staff. A managed service can be provided by an internal local authority department, or by an independent contractor.

3. More specifically, the objectives were:

   • to demonstrably improve arrangements for recruiting all types of agency, interim and temporary staff across London, including administrative, clerical, social care, professional and other difficult-to-recruit staff disciplines;

   • to make best use of, and build on existing procurement skills, in the specific area of agency staff recruitment;

   • to reduce transaction costs in the procurement, implementation and operation of managed services;

   • to increase the value added by managed services;

   • to encourage the adoption of best practice across all London authorities;

   • to identify further opportunities for cashable and non-cashable savings;

   • to identify and build long term relationships with managed service providers to ensure continued value for money;

   • to identify approaches used in other sectors in order to promote good procurement practice for public bodies;

   • to ensure that the quality of and the ability to supply agency staff workers are maintained and improved;

   • to ensure that all project deliverables and recommendations recognise the likely impact of equalities, diversity and organisational development policies, as well as community development strategies. PROGRESS AGAINST INTENDED DELIVERABLES AND OUTCOMES

4. The project has successfully delivered:

- An analysis of the use of agency, temporary and interim staff London wide;
- An analysis of LBH as a typical London local authority with unmanaged agency staff expenditure;
- A report, which details options for collaboration across London to achieve further savings;
- A step by step guide for local authorities to enable them to better manage agency staff and achieve savings in this category of expenditure;
- A database to receive and share information regarding the agency workforce across London – the Electronic Knowledge Exchange (EKE);
- 15 London boroughs signed up to the EKE, with the potential for more users to join
- A Managed Services User Group.

5. Some of these achievements are outlined in more detail at paragraph 7 below.

FUNDING AND COSTS

Budget

6. The project started in 2005/06 with a budget for its first phase of £135,000. Not all budgeted funds were spent in 2006 and 2007, and so they were carried forward. In 2007/2008 and 2008/2009 a further £130,000 and £80,000 respectively were budgeted for a project manager and administrative support, EKE hosting and maintenance, communications, managed services venues, ICT equipment and licences, room rent, printing and stationary, travel, supplies, services and miscellaneous expenses.

7. This funding was made available from Capital Ambition and claims for all project costs have been submitted.

Claim for outstanding expenditure

8. A total of £285,653.55 has been paid by Capital Ambition to LBH. Capital Ambition has advised that there remains £24,993.45 of budgeted funds. LBH believed however that there remained £60,000 of budgeted funds, and has performed work to the value of £58,617.81 accordingly. This £58,617.81 is £33,624.36 in excess of the budget which actually remains. LBH nonetheless wishes to claim for the full unpaid amount of £58,617.81. A claim form to accompany this application for payment is attached to this project closure report.

CHANGES MADE TO PROGRAMME AND WHY

9. Some commercial managed service providers had reservations about joining the EKE. They were concerned about disclosing information such as agency mark-ups which they considered to be commercially-sensitive. The EKE was therefore tailored to address these concerns.

MITIGATING ACTIONS TO RISKS, MANAGEMENT OF ISSUES

Issues

10. Issues were managed and tracked on a regular basis. Issues were added to and deleted from the Issues Register throughout the project. One challenging issue related to the change in project managers and project administrators throughout the assignment. Over the course of the project there were four project managers which led to some handover and continuity issues.

Risks

11. There were a number of risks highlighted at the beginning of the project. Risks were managed and tracked on a regular basis by the Project Manager and were added to and deleted from the risk register throughout the project following review and approval by the Project Board.

NOTABLE ACHIEVEMENTS

Toolkit

12. An initial launch event was held to launch the toolkit for managers. This event was a success with good attendance and excellent accompanying press coverage. The toolkit is now accepted as best practice in the public sector and is being promoted for use nationally by the Office of Government Commerce (OGC). It has subsequently been refreshed and is due for re-publication soon. The last information available showed that the toolkit has had over 20,000 downloads from all over the world.

Electronic Knowledge Exchange (EKE)

13. Harlequin Solutions were appointed to develop the EKE, and initial user group meetings - comprising both procurement and human resources professionals - were held to discuss the outcome of the development. These sessions were attended by: • Corporation of London • LB Croydon • LB Haringey
14. The EKE utilises the databases from member-managed service providers in London, and pools together aggregated, searchable statistics for the agency workforces. The EKE is searchable by selected boroughs and data for comparisons within London includes:

- Pay rates by role
- Numbers of staff
- Total expenditure, and by sub category
- Benchmarking
- Market intelligence
- Trend analysis, to see how everything changes over time

15. The EKE is currently being used by both procurement and HR personnel in participating boroughs, in defining the agency workforce, identifying gaps, skills shortages etc. The EKE is a useful tool for anyone who interacts with their managed service; be it from ordering an agency worker to making strategic corporate decisions about agency staff usage.

16. Data is captured from the managed services by XML in accordance with government data transfer standards (eGIF) and is anonymised so there are fewer data protection implications.

17. The London Heads of Human Resources and SLT sub-group have continued to support the process. Consequently participation in sharing information via the database has exceeded LBH’s initial plans for six London authorities. 15 London authorities in total are currently sharing their data through the EKE and work has been ongoing to bring the others on board. This work continues with all outstanding boroughs to gain engagement. In addition, the project team has presented the EKE to the OGC’s Agency Staff Demand Management group as an initial step towards rolling out its use beyond London.

**Managed Services User Group**

18. The development of the Managed Services User Group has been an extremely successful aspect of this project. All London boroughs now have a managed service of some type in place and forums were held in order to:

- Develop a managed service concept and act as a central point of communication with suppliers about future requirements;
- Share operational and concept innovations;
- Share best practice and lessons learned;
- Share updates in agency worker legislation.

19. The forums have been attended by all of the London boroughs, as well as the Metropolitan Police force, Transport for London, LFEPA, DCSF, Essex County Council, Surrey County Council and the Learning Trust and the evaluation of the events has been extremely positive with average attendance of around 45 people.

**Spend Analysis**

20. A major review has been undertaken on the use and cost of agency, temporary and interim staff across London. The findings from this study have led to the identification of a number of ways in which cashable and non-cashable savings can be made. In addition, opportunities to collaborate between organisations have been noted, and a better understanding of the temporary workforce and future needs thereof can be anticipated.

21. It has been established that almost £600m is spent on temporary staff across London each year and in some authorities temporary staff can comprise as much as 25% of the workforce. Organisations are often in competition for skilled temporary workers, and significant differences have been found between pay rates for similar work, and commission rates.

22. All London authorities have now recognised that benefits can be achieved through better control of these costs and ready availability of management information. All have implemented a managed service of some type achieving annual cashable savings of up to 9%.

23. LBH has achieved savings by implementing a managed service of £400,000 per annum. If LBH is taken as typical of the 33 London local authorities, this could represent savings of £13.2m across all 33 authorities, or approximately £40m of savings over three years.

**LESSONS LEARNED**

24. The principal lessons learnt from this project are as follows:

- Agree the respective roles of the people engaged much earlier. Some of the issues were about people having sufficient time to carry out the functions alongside existing priorities and workloads.

- Project board meetings must be given priority by project board members.

- Confirm clear project objectives (i.e. EKE function) at each project meeting. This would help guide the team in terms of what is achievable. There were a variety of views around its purpose and at certain points in the process these views dominated discussion at the expense of the development.

- Rather than approach the managed service providers in the first instance regarding their participation in the EKE, concentrate efforts on gathering support from the local authorities themselves and asking them to champion the resource with their managed service providers. • Do not rely on a single point of contact in authorities where the issues cross over into different service areas.

• When faced with resistance to participate in the EKE from some managed service providers, ask Capital Ambition to intervene.

• Some stronger intervention by Capital Ambition when project issues were first identified may have minimised some of the delays to overall completion of this project.

• Ensure that keeping up with the pace of day-to-day activity does not come at the expense of checking that originally agreed objectives are on track to be delivered.

• Ensure there is a thorough hand-over when there is a change to the project manager or project administrator.

EVALUATION TO DATE

25. The project has delivered some significant benefits across London and has helped shape the agency / temporary staff market. In terms of value for money (VFM) the project has delivered huge cashable and non-cashable savings for a relatively small outlay.

26. The toolkit is recognised as best practice on a national level and is being promoted as such by OGC. The number of downloads of the toolkit (over 20,000) has far exceeded expectations, and readers are from local and central government as well as the private sector.

27. The EKE is a recognised tool which can assist in providing useful data to help benchmark against other local authorities and make strategic decisions for the engagement of agency and temporary staff. Although 15 local authorities are signed up and participating in the EKE, there needs to be a continued drive to increase the number of participants.

PROJECT CLOSURE RECOMMENDATIONS

28. In completing this project, the project board recognise that there are business continuity elements which need to be addressed. It is the board’s belief that this work should be undertaken by Capital Ambition who are best placed to encourage further participation in the EKE and to oversee via the LDA the continued work on the Managed Services User Forum which has proved to be so popular among London authorities. There is a good appetite amongst members to use this group to achieve further reductions in transaction costs through closer collaboration, and to shape the future of service delivery. This will be taken forward initially through an event designed to assess future needs around agency staff within the wider context of procurement generally, the changing HR landscape and organisational changes.

29. LBH requests that the claim for payment attached as an appendix to this report is approved.

30. The final recommendation of the Board is to gain project closure approval from Capital Ambition.

BENEFITS TRACKING / LEGACY MATTERS

Pan London Collaboration Opportunities

31. Capital Ambition has sponsored a project to develop a pan-London portal for sharing policies, specifications and other documentation relating to the procurement, implementation and operation of a managed service and related to human resources issues. The project is being led by the LDA. The project is currently at design and consultation stage, with boroughs submitting their ideas for the look and content of the portal. LBH is a member of the project group, and will ensure that the option to include the EKE as a tool on the portal is taken forward.

Roll out of toolkit

32. The toolkit referred to at paragraph 6.1.1 above is being rolled out nationwide with the assistance of the OGC.

EKE

33. Data on the EKE will continue to be maintained, and further use of the EKE promoted.

Savings

34. Savings should continue to be achieved. More work is to be done on demand management for temporary and agency staff.

DISSEMINATION OF WHAT WAS LEARNED

35. The widespread use of the toolkit referred to at paragraph 6.1.1 above has spread the knowledge and lessons learned relating to the use and implantation of managed services for agency and temporary staff.

36. An event was held on 23 March 2010 in London to disseminate the work covered by this project.